Compared with house values five years ago, North Hobart has seen the biggest improvement, with houses now worth 25 per cent more.

CoreLogic head of research Tim Lawless said conditions had been radically different from region to region in 2016.

In Hobart, the pace of capital gains had accelerated, with gains rising higher than 8 per cent over the past 12 months, he said.

Mr Lawless said trends to watch for in 2017 include rising mortgage rates, a peak in the construction cycle, the potential for more regulation in the investor space, and renewed focus on housing affordability.

“Higher mortgage rates have the potential to dampen housing demand, particularly when viewed in the context of historically high debt levels, which implies households are already very sensitive to the cost of debt,” he said.

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